BitInstant looks to bridge virtual and real world currencies with international Bitcoin credit card

Exchange service BitInstant is reportedly planning to bridge the gap between the digital world of Bitcoin virtual currency and the real world of debit/credit card payments. An unconfirmed source from the company has revealed that BitInstant is in the final stages of creating a Bitcoin card that will also function as a standard international MasterCard.

Bitcoin has been steadily attracting an active community around it since its arrival in 2009. Though the allure of anonymity and its technical nature made it initially associated with hackers and the online underworld, it is becoming increasingly mainstream.

The arrival of the first international Bitcoin-supported debit card could give the service a high-profile boost. Coding in My Sleep posted an IRC chat transcript where BitInstant co-founder Charlie Shrem allegedly claimed that the credit card is in the final stages and may arrive in 6 to 8 weeks time. The report noted the development as being the “biggest Bitcoin breakthrough in recent history.”

The card will operate as a MasterCard and will contain a QR code and a Bitcoin address that will let users put funds on the card for a 1 percent fee. Shrem said BitInstant has managed to keep fees low by cutting out the middleman used on some US-only Bitcoin credit cards.

During the chat, a mockup of the card was shown, though it bears repeating that it comes from an “unconfirmed source”.

Bitcoin users who prefer to remain anonymous may end up steering clear of the card, as the card issuer will comply with local regulations that require proof of identification. Shrem did, however, note that he believes Russia has less stringent rules.

BitInstant is said to be offering the first 1,000 cards for free and will sell additional cards for a low cost, around $10. Owners of the card will be able to keep their funds in Bitcoins before paying in government currencies.

The peer-to-peer currency first went mobile a year ago with the introduction of an Android app that supports Bitcoin payments.

Update: Mastercard has issued the following statement about the rumored BitInstant credit card:

“MasterCard has no relationship with BitInstant. There are issuers who allow the conversion of Bitcoins to US dollars and other currencies, delivered on prepaid cards. However, we’re not aware of this particular programme from BitInstant.”